What Happened?
Shares of residential swimming pool manufacturer Latham (NASDAQ: SWIM) jumped 7.5% in the afternoon session after the broader market rallied as Federal Reserve Chair Jerome Powell hinted at a potential interest rate cut. The broader market rallied after Federal Reserve Chair Jerome Powell's comments at the Jackson Hole symposium suggested a rate cut could come as soon as September. This dovish stance from the central bank was welcomed by investors, as lower interest rates generally make stocks more appealing compared to lower-yielding assets like bonds. The positive sentiment was widespread, with the Dow Jones Industrial Average soaring on the news. Latham's stock likely rose in tandem with the market's bullish reaction to the potential for a less restrictive monetary policy, which investors hope will support economic activity and corporate earnings.
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What Is The Market Telling Us
Latham’s shares are extremely volatile and have had 38 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 3.1% on the news that the latest Consumer Price Index (CPI) report showed inflation holding steady, bolstering investor optimism for a potential interest rate cut by the Federal Reserve. The data, which revealed that inflation remained at 2.7% for the year ending in July, was seen as a positive sign by investors. This stability increases the likelihood that the Federal Reserve might lower interest rates at its upcoming September meeting. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates into higher consumer spending. This is particularly beneficial for the Consumer Discretionary sector, which includes companies selling non-essential goods and services like apparel, travel, and electronics.
Latham is up 26.2% since the beginning of the year, and at $8.23 per share, it is trading close to its 52-week high of $8.35 from December 2024. Investors who bought $1,000 worth of Latham’s shares at the IPO in April 2021 would now be looking at an investment worth $302.07.
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